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Show Notes

Transcript:

Felix: Today I’m joined by John and Rana Lustyan from edoughble.com, that’s E-D-O-U-G-H-B-L-E.com. I love that name, super clever. Edoughble is not your cookie-cutter cookie dough. Sorry, Edoughble is not your cookie-cutter cookie dough company. They sell the best edible cookie dough you’ll ever taste and was started in 2009 based out of Los Angeles, California. Welcome guys.

Rana: Hi. Thanks for having us.

Felix: Yeah, excited to have you guys on. Tell us a bit more about your store and this cookie dough that you sell.

Rana: Yeah. We came up with the idea in 2009 after a big food brand recalled 3.6 million tubes of cookie dough because people ended up in the hospital after eating the cookie dough that is meant to be baked, eating it raw because who doesn’t like to eat raw cookie dough? I have been a pastry chef since about 2003 was my first kitchen job at Spago in Beverly Hills, working with Wolfgang Puck, an amazing opportunity. Then I went off to culinary school, Le Cordon Bleu, and ultimately, this recall really inspired me. It made me think why is there no edible cookie dough? I just want to eat cookie dough out of the tub. That’s how we got started. We wrote a business plan. We won the competition. After grad school, we realized we needed money to start a business. We had to get real jobs and then finally, did a soft launch with an e-comm business, starting with Shopify in 2013. Then 2014, I quit my job to really focus on the business full time.

Felix: Very cool. You had this notion, or not notion, but you felt like why isn’t there edible cookie dough like you said. How did you guys begin this process of creating a product that was going to be able to be sold? What was the very first step that you had to take once you recognized there was a potential need in this market?

Rana: We did some recipe testing first and foremost because for me, that was a low-hanging fruit. Anytime I got to make dessert in the kitchen, I was happy. We started with recipe testing and tasting, people in school, professors and peers. Then we did surveys. I would stand outside Whole Foods Markets with my clipboard and my surveys and asking people to answer a series of questions about dessert consumption and cookie dough consumption. We kind of took some feedback and grew from there.

Felix: This survey that you did in person, I like it because you’re getting out there, you’re talking directly to people. A lot of times, entrepreneurs, e-commerce entrepreneurs, we always have a tendency to do things online, right? Let’s run a survey. Let’s send it out online. Let’s find people online to ask these questions to. Why did you feel it was important to go stand outside of Whole Foods and ask these questions?

Rana: I think for us, we saw the product specifically at a natural grocery chain. We wanted to see, first of all, who was shopping at these stores outside of just our own experience. When we do our own grocery shopping, we’re not really looking at who else is doing shopping there at the same time. For me, it was just to get also face-to-face contact with a consumer. Oftentimes when you send online surveys, sure you might be setting your demographics of who you want to be taking your survey, but it’s nice to have that face-to-face contact with people who will or will not buy your products.

Felix: How many questions were you asking though? You’re stopping these people when they’re doing their shopping. Maybe people are on their way home from work and stopping by the grocery store. A lot of times, we feel like we don’t want to inconvenience people. We don’t want to intrude on their lives, but of course, there’s very valuable research for you guys to get, especially this early on in your business. How did you approach them? What kind of questions did you feel like you needed to get answered?

Rana: Well we had a series, I think it was about 20 questions. We asked people for about two minutes of their time. We said it would be a fun survey. It’s about dessert. I remember, I thought I was very awkward. It’s hard to … I’m always the person that says no. I don’t want to take surveys outside of a grocery store. I’m busy. I just came to do my shopping and I have 20 minutes and I got to go. I hate when the people are like do you want to save children’s lives, and you’re like no, I don’t have time for that. For us, it was more like, do you like dessert? Can you take a two-minute survey about dessert consumption?

It’s also you don’t want to have any bias or put any ideas into their head. You don’t want to say anything like, you know that eating cookie dough could kill you, so do you want to take this survey about it, an edible cookie dough that’s safe to eat raw? We wanted to make it very unbiased, just about in general, dessert consumption. Then towards the end, we would sneak in little questions about do you eat raw cookie dough? Why do you? Why don’t you? That kind of a thing to just also understand people’s feelings about the dessert and when they would or wouldn’t eat it.

John: I think we were in business school, so we were doing everything by the textbook, doing all the research and pulling great data and numbers and things that said these were the trends. This is what people care about. It’s a health-conscious consumer. They don’t want all these preservatives. They want gluten-free. They want vegan. They want all these things. One, we wanted to see okay, does this really apply to the specific category that we’re talking about, or just how generalizable are these things when we’re able to actually talk to real people, or are they just kind of checking boxes like yeah, that would be nice.

I think what we found out was that people loved cookie dough. It just sort of lights people up. If there was a better tasting and safe to eat option, that they’d love it. It didn’t have to be void of all the great taste. It didn’t have to be gluten-free and vegan and sugar-free and everything else. It just had to taste great and be healthy. I think that helped really to direct us to this place where it was like, let’s not talk to this super niche audience. If we can just nail a great product that is safe to eat and a ton of fun, there’ll be some serious appeal.

Felix: When you say that you didn’t want to focus on a super niche audience, you’re talking about people that were already previous cookie dough eaters? What was the niche audience that you had an idea of focusing on at first and then expand it from …

John: I think everything that we were reading at the time was saying these were the trends in the grocery place and the consumer packaged goods space, right? Like gluten-free is a big trend. I think it was a little bit after the South Beach Diet, two years after that. It was all about cutting back on gluten and cutting back sugar and all these things. We did a ton of recipe testing around that. It just ended up not tasting very good and being very granular. We said why create something that we don’t think taste that great, but it might be talking to only 5% of the total market universe, when we could create something that was just a fantastic tasting product. The other 95 would be in love with it. Maybe that 5% we wouldn’t get.

Rana: At the end of the day, the people who got in trouble for eating raw cookie dough, they were eating big food brand cookie dough that they found at their local mass supermarket, not their … They’re not looking for diet food. They’re not looking for vegan and gluten-free. They just want a yummy dessert. We realized those are the people we need to target because that’s where the market is.

Felix: Right, so this is great insight because you could have not done this and then just gone down that route of what you found in the textbooks, the academic approach of finding out that gluten was popular, so maybe you’d just gone with the gluten-free cookie dough and just gone down that route. But from surveying potential consumers, potential customers, you were able to understand that there’s a totally different market, a totally different angle you could approach with your business. Was this all discovered through just one session of survey taking? How much research, how much in-market, out in the field research were you guys doing before you came up with this insight on this particular angle that you wanted to take with your business?

Rana: To be honest, I think it’s still something that we talk about ’til today. At some point, it’s paralysis by analysis. You’re going to get 100 different opinions from 100 different people. Different people have their own taste preferences and at the end of the day, you can’t please everyone. You just need to figure out where the market lies. It’s something that we’re still figuring out because if it’s not the product formulation, it’s the price or the packaging or the size or the placement or the store that it’s in. Maybe Whole Foods is one great avenue where people would look for a product like this, but let’s say another specialty store like Gelson’s in the Los Angeles area has an older demographic who doesn’t necessary seek out cookie dough because everybody’s in their 50’s and 60’s.

It really just depends on really getting to know your market. I think that’s where we have a really strong advantage because our e-comm business is so strong. A lot of brands that are only in stores, they don’t know necessarily who’s buying their product, whereas we have a very clear idea of who’s buying our product because of our e-comm business.

Felix: Makes sense. Like you’re saying, this understanding of the market, understanding of how to present your product to the market is ever evolving. You’re always learning about different ways, different channels to go down, different way to message your brand. At the very beginning, how did you know what you had was enough to move forward? Because a lot of times, entrepreneurs would spend a lot of time doing this research, but then they get stuck in this analysis by paralysis stage that you’re talking about. Maybe their business could be successful but they never get off the ground because there’s too many doubts along the way that they want to cover. What made you guys know for sure to move forward?

Rana: I think five years is what made us know we had to forward because we started it in 2009 in terms of the idea and then finally, in 2013, that’s when we kind of just looked at each other and we were like we’ve got to get something out there, because you can go through 100 iterations of your logo, 100 different packaging sources and figure out who’s going to supply your packaging. Should you do paper and should you do plastic and should you do foil? It’s like never ending, the decisions that get to be made when you start a business.

Ultimately, we found a deal website that had a big email list. They wanted to send out the launch of our product and our website. From that, that’s kind of what got us started. We just thought, let’s put up a website. Let’s just pick a packaging. We can always change it. Let’s pick a logo. We can always change it. We were like let’s just see if this is even a thing. If we get this company to launch us and give us some PR and nobody orders it, then we’ll know we’ve got to make changes. Maybe all those people who got that first email blast can give us some feedback and let us know why they didn’t order it. It just went from there.

Felix: Yeah. This five years that lapsed that you’re talking about, so it’s sometimes enough to get people to realize wait a second, I’ve wasted all this time. I could’ve gotten started way earlier. On that first … Hold on a second. Let’s start with this. How did you get in touch with this? Is it like a daily deal website? What was this website that gave you your initial PR?

Rana: They are no longer in business, but they were called Daily Candy. They had a national Daily Candy website and then they had local ones. We were launched just locally with DailyCandyLosAngeles.com, I think it was, or DailyCandy.com/losangeles, whatever it used to be. The site is no longer in business unfortunately. Daily Candy was a daily. They either had a deal or they just gave you some cool information about a business or a venue in your area. It’d be like a cool new apparel brand. You could subscribe to either your city or the national website or any city basically. They had like 10 cities and they would give that same information, the best local ice cream spot or the cool new apparel brand or any kind of new … This was not necessarily pre-Amazon, but it was before you did much online shopping. It was cool because it always had direct links to the site or it gave you the address in your city of where to go or who to call. It was great. It was great for PR.

Felix: This deal website that reached out to you, did you already have some kind of business at the time? How did they know? How did you guys connect with this deal website?

John: We were in business school at the time and the USC network is pretty strong here in LA. Our class is pretty small too, so everyone knew each other. We’re great friends and all. We’re very willing to help extend network and contacts. A buddy of ours knew someone that worked there and said hey, you got to connect. This seems so perfect in their demographic fit. That was the introduction. It was having our pitch down, making sure the people around us were a part of the process and knew what we were doing and felt like they were helping build us alongside. They were that much more inclined to think about how they can look at their network and extend that to us to support.

Felix: For sure, yeah. I think networking is of course a huge asset that you need to tap into. When you first approach this deal site, what did they want? What did they want in return? Was it some kind of percentage of the sales? How was it arranged?

John: No. Just to clarify. It wasn’t a daily deal site. It’s more like The Skim or PureWow or one of the more lifestyle or content blog or newsletter businesses. It was more just about at a national level, what’s happening in the fashion lifestyle space. To Rana’s point, locally, is there a cool new thing, retailer that just opened up? Is there a cool new restaurant? I think if you know anything about Drybar, which is a huge, nine-figure business now, they credit the early marketing launch with a Daily Candy feature. It’s more in that realm. There was no rev-share or anything. It was just hey we love it. We think our readers will be really interested in it. We think it’s a great fit, so write up. We sent them samples and had a chat with them. That won them over.

Felix: Okay, that makes sense now. They were basically looking for content, looking for cool things to promote to their audience and you guys were a good fit for it. Do you remember the results from this … Was it just one email blast? How much did they promote your business?

Rana: There was one email blast. I don’t remember how large their list was, but we had about 200 orders from that blast. That’s kind of how we launched.

Felix: Did you have 200 products in inventory to ship out? How did you prepare for this kind of big PR push?

Rana: No. We made everything fresh to order.

John: We still do. It’s something that, certainly as we scale bigger and bigger and become a national brand and in grocery stores everywhere, we certainly have to carry inventory. Really, a lot of our manufacturing process hasn’t changed much since those early days where you, Felix, are ordering today. We will make your order today or tomorrow and have it out in a shipment to you that day. Certainly our production resources were strained over the next couple days. But whether it was that Daily Candy email blast and fulfilling all those orders or a little bit later when we were featured on Reddit and had almost 2,000 orders in 48 hours come in, I don’t think anyone ever felt like we were behind on delivery even though we were making it fresh as the orders came in.

Felix: Very cool. This business plan competition that you guys won, was this prior to or after that initial email blast?

Rana: Oh that was like five years prior.

Felix: Oh five years prior. Was was the result? Why did you enter the business plan competition? What did you guys get out of going through a process like that?

Rana: We entered it through school. It was through the grad school at USC. We just submitted our plan and then we got to pitch to a panel of experts. We had the CEO of Bristol Farms on the panel, which was like meeting a celebrity, to the food business, to meet the CEO of a grocery store chain. He actually loved our product and said that he alone, he and his six kids alone would keep us in business. I think people liked having a tangible product. It wasn’t just some big idea. It was like we brought in samples of cookie dough in little plastic souffle cups. We printed out a logo that we had designed on 99 Designs. It’s funny. The old logo we have on our website actually-

Felix: Yeah I saw it.

Rana: We were very inspired by Ben and Jerry’s and that kind of cartoon-like feel, very serendipitous and whimsical and fun, cartoon-like. Basically, we pitched the idea. It was like a no-brainer. Still even now, when I do demos at grocery stores, people are like this is genius, either why didn’t I think of this, or odd people in their 50’s that are like I had this idea when I was in college. My girlfriend and I sat around eating cookie dough and we thought why isn’t this a thing. They’re like, now it’s a thing.

Felix: That’s awesome. Did you use any parts of that business plan five years later after you started putting it into action?

Rana: Yeah. It kept us focused because like I said, that analysis can continue to work its way into everything that you do. It let us focus on what were our high level … What was the strategic direction? Were we going to go specialty or were we going to try to make this more mass? It helped us with just the industry knowledge as well.

Felix: If you were to go back and start from the beginning again, you would still go through this business plan process, it sounds like. For someone out there that is maybe thinking about getting started for the first time, or they have started but don’t have that much focus and wants to go back and have a solid business plan, what are some thing that are important to think about or to include in a business plan?

Rana: I think the biggest thing is your industry research to understand who are your competitors and what makes you different. How are they under-serving the market and how is your product or service going to serve the market better? Also having a really clear understanding of your customers and talking to as many customers as possible to get their feedback, whether it be about shopping habits, packaging, the product, their purchasing behavior, just really having a great idea, just having a very solid comfort level with who your customers are going to be. Also maybe even a plan of how you’re going to grow your customers and a strategy there with some budgets.

Felix: Was all of this, like you were saying, it gave you focus, but was it all accurate when you look back on it? How accurate was it, what you guys projected, what you guys wanted to do? How much did you follow that five years later?

Rana: I think we … There’s a lot of knowledge I wish I had back then and it’s just knowledge that you get after you learn the hard way, or not necessarily the hard way but the slow way of actually getting your product out there and then trying to figure out why is it selling better here than there, or it sells a lot better at this price point when it’s on sale than it does at this price point. Why does it sell for one price online and a lower price in store, and understanding the difference in consumers at the different outlets that you’ll sell your product. The online market is a lot different from the wholesale market.

Just all of those things combined, and also just really learning. To us, learning how to get more consumers, I’m still like how do we get more people to sign up for our email list? How do we get more people to learn about our product without having a massive advertising budget or really any advertising budget?

John: I would say you don’t have to go apply to business school and take out a lot of student loans and spend a couple years of your life going through academia and sitting through these classes and crafting these big, extensive feasibility analysis and business plans that you tweak over the course of a semester. We had the luxury of doing that. It was a great way to get a lot more out of our MBA.

I will say of the very extensive business plan that we put together, the main things that still apply and that I think we can draw out and say we really identified that there was a problem. We did enough research to say this is a big enough category for us to go after. We did a lot of in-field research that we talked about earlier. Then we created a product that was really worthy of the business opportunity. It wasn’t just saying this is a great opportunity so it’s a shoo-in. We could have all those things line up but the product itself doesn’t deliver. It doesn’t matter how great or how feasible something is if the product isn’t great.

The core take aways from all those classes was just is it a big enough problem that there’s an opportunity, and do you have the solution to fill that. Then what we’ve learned so much in actually launching has been the real education. You’re learning every day how to manage your customers’ expectations and how to tweak your product and your brand and how to talk to buyers and diversify your business model. All these things that we never laid out when we were sitting in the USC library doing research on Mintel or all these obscure research databases.

Felix: Yeah, I agree that you don’t really get to learn until you are in the game yourself, as you’re playing the game because like you’re saying, all of these situations that you were put into after launching the business, it’s really hard to learn all that stuff by reading the textbooks and kind of being behind the book, behind the screen. The success that you were able to get early on, once you were able to launch with the email blast, you mentioned before that a lot of people come up to you and say things like I had this idea, why didn’t I think of this. Did you start getting competition very quickly once you started getting this publicity? Were people, were copycats moving into your space?

John: Yeah. I think that came a little bit later. Once Rana quit her other … She at the time was consulting for restaurants. We decided to go all in and she quit. A couple days in, she talked to someone that was sort of a power user on Reddit. I feel like while Daily Candy was the great little beta test marketing blast that put us on the radar maybe locally to some select group of foodies, this Reddit attention really put us on the map nationally in a big way.

I think about a year later, we saw some people start to pop up and say wow, look at what these guys have been able to build. They’re clearly tapping into something and saw what we were able to create online. Platforms like Shopify make it easy to turn a shop on pretty quickly. We’ve definitely seen people pop up since for sure.

Felix: I actually want to talk about this Reddit experience that you had. You guys knew some kind of power user, someone that was popular on Reddit. How did you connect with them? Was this somebody that you knew personally?

John: No. We didn’t seek anyone out. Rana can talk to it because she randomly was put in touch with the CMO of some candy store chain, right?

Rana: Yeah. I was setting up a meeting. This was my first week full time for Edoughble and I found a candy store in Glendale. The CMO was visiting from San Francisco so we had set this meeting date. It turns out he’s an influencer on Reddit. I had no idea but he liked the product. It turned out it wasn’t a good fit for the candy store, but that night, all of a sudden, we were getting all these orders. When we went to check traffic on Shopify, we saw they were being referred from Reddit. I didn’t even know what Reddit was. We saw that he posted. Basically he posted my friend started an edible cookie dough company and it’s incredible. Then he posted again and said oh, I should probably tell you the name of it. It’s edoughble.com. Then we had 2,000 orders in 48 hours. It was crazy.

Felix: Wow, so you guys were able to fulfill all 2,000 orders just from you two?

John: No. It was …

Rana: No, we had to hire. That’s when I posted on Craiglist. We had to find a new kitchen space. We ended up getting all the orders out in, I think it was like six days.

John: Yeah, so it was me coming home from my day job at like seven or eight and then working ’til two, three at night. We were buying all our friends dinner and they were loving it too. They were chipping in and amazed by what was happening with this little thing that we just started on paper and then just blew up over night. We had friends and family, everyone chipping in. We were really excited to get everyone’s product out on time.

Felix: What’s involved regulation-wise when you’re creating a food product, especially if you are just starting out? It seems like there could be a lot of … Is there a lot of overhead in renting kitchen space? Do you have to go through all that early on?

Rana: In the beginning, there’s really not much regulation. There’s definitely … In California, or maybe it’s specific to Los Angeles even, but there’s something called the Cottage Food Act where you can make products at home, but really, the only time that’s regulated is if you’re going to go into a farmer’s market. If you’re selling online, there really aren’t regulations. There’s no health department visiting your facility. It’s nice, if you have plans to grow, it’s nice to operate under somebody else’s wholesale permit or health permit. We rented space from a catering kitchen but there’s also places where you can rent kitchens, wholesale or kitchens by the hour.

It just took some research and finding something that’s not too far from us so the commute wouldn’t be too bad. We were able to get kitchen space one day a week but that week where we had all these orders, we were able to basically work around the caterer’s schedule. We were able to get into the kitchen every day but at random times. Then it becomes a challenge to find staff that can work at those random times every day that you need them. Then making sure that the product quality is still great because for example, I had to make the product. I wouldn’t let anybody else make the product. I was hiring people to scoop and package. Even shipping, I didn’t want anyone else to do the shipping. I wanted to make sure that I could manage and make sure that the customers were getting what they ordered.

Felix: This influx of orders that you received, those 2,000 orders in 48 hours, I’m assuming that there were still going to be some big boost in the daily orders that you were getting, but it probably subsided a little bit right? There’s kind of this big influx and then I’m sure it died down a bit after the Reddit post that went away a bit. How do you hire in a situation like this because you’re posting on Craigslist. You’re asking people for help because you obviously need to fulfill all these 2,000 orders, but the job isn’t a full-time job yet because you don’t need someone. Maybe you don’t need someone full-time yet once this big influx dies down. How did you manage that?

John: It really was … We had a couple people that we paid, but it was heavy on family and friends. We were … There were just stacks of empty shipping boxes that we’d create by the hundreds that were just filling up inside her parents’ house, that we would all do together, stickering lids. All these things were happening with her mom, her dad, my friends, whoever was around that we could talk into helping us out.

Rana: Yeah, I know. Order dinner for. Can you come over for three hours tonight and sticker lids?

John: Yeah, so we definitely … It was a friends and family sort of …

Felix: Yeah, I can imagine that because it’d probably be really hard to try to hire for a job like this. You have to train them. You have to get them up on speed. Then, all of a sudden, you might not need them as much anymore. It’s a big investment for you and of course, anyone else that wants to be a part of it. Friends and family, they’ll love you and support you no matter what. That makes a lot of sense.

After this big boost, the 200 orders that you received from the email blast, the 2,000 orders that you received from Reddit, what was next? What was the traffic plan moving forward? I’m sure you weren’t just sitting there and hoping and praying that you would continue to get more spontaneous boosts of traffic. What was the plan to drive traffic from there on?

John: We knew that our marketing plan couldn’t be be featured on Reddit by someone that is going to have their post seen by thousands of people. I’d love to say that because we went to business school, because I have a background in marketing that we had this brilliant, outlined marketing plan. I think we rode the wave of Reddit and were able to get a lot of follow-up press interest and media coverage from US Weekly and Glamour and a bunch of different publications and websites. That really subsisted us for a number of months after, and even, I would say, through the year after just because somebody heard about us from somebody who saw us on Reddit a long time ago.

Felix: They were approaching you then. You weren’t approaching them, these …

John: I was still working my day job and I still do have a day job. Rana was furiously fulfilling orders and recipe testing and perfecting that. Our marketing plan was essentially, let’s ride all the incredible wave of earned media from Reddit and all the sort of follow-up media that we received. Let’s acquire and turn this interest from people visiting our site and placing orders into a database. Let’s continue to re-market to that database because they’re interested. They’re some of the early adopters. Everyone that came to us, I think, they’re really excited to not just stumble upon us and try us but they’re really excited to tell their friends that we exist because we were this new, novel thing that they felt like they’d always been waiting for.

I feel like our brand played really well into a word of mouth, social media brand and we heavily leaned into Facebook and Instagram, Pinterest and Twitter a little bit later, but we’re not selling widgets. We’re selling this really fun product that everyone has the same sort of excited, whimsical reaction to eating cookie dough and they have all these memories. What we had to do was just continue to be in front of them and put some really great content in front of them. They were sharing it. It was more just about continuing to touch them, to launch new products. That was always our biggest marketing plan, was just to create great content around our product, which is pretty photogenic to begin with. We’re not selling widgets. Then to create newness and to create a reason for people to come back to our site through fun, new product flavors.

Felix: Gotcha. The initial boost of PR led to more PR. Then all those customers are coming and buying. You were then re-marketing to them through their email and presenting new products to them through that way too. I think one of the interesting things that I want to learn more about from you guys is that because the PR came on so quickly and in such a big blast, and all these new customers are coming, did you guys already have your brand and your messaging nailed down at that point and you were ready to, not spit it out but you were ready to let it spread everywhere that you could? Or were you guys still trying to figure out what was the company, what was the brand, how you want to message it?

John: Yeah, I’d say that the things that we had in a pretty good place, sort of in our back pocket, at launch was we felt amazing about the product that we created. The cookie dough is just like one of the best things you’ve ever tasted. Everyone always says oh, it tastes like cookie dough, like the best cookie dough I’ve ever tasted. I was like well, it is cookie dough. It’s what it should taste like. They’re still used to some different, refined, processed version of it.

We had a great product. Then we had a couple people that I used to work with in my previous life sit down with us and work on basic logo, basic packaging, a positioning statement, some basic assets that we thought spoke to our brand. We had those things pretty firmly nailed down and just as one of the key things, I think themes that keeps being brought up is the importance of getting it out there and iterating. While we love our brand and we love the path that it’s taken and the way that it’s matured, I think we’re excited about where it’s going and we’ve learned so much from the customer that we’re continuing to evolve a little bit more and really celebrate the fun of cookie dough and maybe not be so serious.

We had our branding down to a pretty good place and we had our product down. Once all that interest came in and the orders came in and people calling us and asking about what the genesis is, what we stand for, those talking points were pretty firmly nailed down.

Felix: That’s cool. When you worked with this friend of yours to figure out the positioning, figure out the branding, how involved was it? How do you even, if someone doesn’t have somebody they can rely on, doesn’t know who to hire for something like that, any tips on how they can go through this process themselves to nail down their messaging and nail down their positioning?

John: The best thing that you can do, I think, is just get out there, walk through shopping aisles. Do the competitive research to understand who’s out there, how they’re talking to the customer. There’s no easy way to do it. Everything that we’ve already talked about, we’re doing a lot of online surveying and online research, but getting out and talking to people and seeing the things that they had in their shopping carts, all that stuff helped us say who this consumer is, what they want, what other things are they buying, what’s the competitive set, what are we going to do that’s different and fresh, and what’s going to stand out. It’s just about …

There’s some basic templates that we always look at, which are just a SWOT analysis. What are the strengths of what we’re creating? What are the weaknesses? What opportunities and threats and how those things help continue to define what makes us unique? We’re always looking at the competitive landscape and our consumer because those things are both evolving so quickly all the time.

Felix: Once you do have this figured out, what were you … Were you sending these kind of messages to your email list? These past customers of yours, what were you emailing them?

John: The majority of our emails, because we try not to be overly promotional and I think we didn’t want to be seen a sort of a discounting brand. Sometimes you can really feel that pressure to break through an email box because people do get so many spammy emails. Everything’s 20%, 50%, 80% off, flash sale, buy now. We will run promotions but we still feel like our product is so unique and really stands out and can stand on its own. Oftentimes, we were celebrating a new flavor and showing a great image of what that flavor looks like. We put together a little flavor story about why we created it or some romance copy about all the ingredients and how delicious they are when all mixed together.

It was just playing up the taste appeal, continuing to show our customers that we are someone who continues to explore new flavors and new combinations and new things. If you thought that you visited our site once and that was it, you’re wrong. There’s a lot of reasons to continue to come visit us and to gift us to your friends because we always have some new flavors. It’s more like a flavor-driven thing. We certainly have an editorial calendar around all the key gifting holidays like Valentines and obviously Christmas and those sorts of things. We just continue to try to stay top of mind with our new flavors, especially promoting those things around special gifting times of year. Sometimes all we have to do is just write about some fun holiday, like National Cookie Dough Day or something like that. We will do a little promotion to celebrate little holidays and things like that.

Felix: You find a reason other than to promote the product to email your list, whether it be to tell the story behind the process of creating it, the reason why you created it, or create content that your audience or your customers may be interested in but does not necessarily have to be directly related to your product. Those are ways that you’ve been able to create content and emails are useful for your customers. I’m assuming that also helps and creates open rates because people know that it’s not just some buy-this-now email.

One thing you mentioned to me about your conversion rate, this is off air, I believe it was in the pre-interview questions. One thing you mentioned was that a way to improve your conversion rate for you guys was to move away from casting your net too wide on your marketing efforts and really being efficient in your targeting of highly-qualified traffic. Can you say more about this? What were you guys doing before and what did you move towards to increase your focus on highly qualified traffic?

John: We try to check every major box in our marketing for an online business. One of those is certainly a light ad spend on banners and other things. It just had us looking at our KPIs a little bit differently where we were driving a ton of visitors and we felt really good about having all that traffic continually hitting our site. Our conversion rate was good and we were like oh, that’s still above industry averages. A healthy portion of our traffic is coming from mobile, which normally has much lower conversion. Adjusted, we felt really good about the conversion, but we said we weren’t happy with the spend relative to the amount of people that were getting through the flow and adding things to their cart and checking out. We weren’t happy with it.

We had some weird anomalies on different countries that were seeing some of our ads, and we certainly never … We don’t ship internationally so any of those things, we wanted to make sure that we were trimming those things out of our buy as we thought they were supposed to be in the first place. As I mentioned, because we’re doing so many things, we can’t physically place all these buys directly so we’re having to rely on freelancers to help us or small little agencies. I think we just took a weekend to really stop and look at where the traffic was coming from, what sources were working, what weren’t.

We just started to trim the fat and look at all the A/B testing that we were doing of the different demographic testing that we were doing. We said quite simply, I mean it’s not like rocket science. We said okay, these four things are really over-delivering and over-indexing relative to the other ones, so let’s double down on that. Let’s trim everything else. While our top-of-funnel quantity of traffic has not been as big, the conversion is much stronger and that’s just because we’re getting more qualified people and we’re serving up ads that are relevant.

Felix: What kind of tools or reports or analytics do you use to determine all of this? What were you look at at to determine that this particular channel, this particular type of ad was under-indexing for the type of visitors that would actually convert?

John: We use AdWords and Google Analytics. We run some really small, occasional spot budgets on Facebook which has a good analysis tool. Then we work with a retargeting company called AdRoll that helps. Once you leave our site … It’s always crazy to Rana. I’ve been in and around e-commerce for a long time and so I’m very comfortable when we can hit a 3% conversion of a 5% conversion or a 7% conversion for a day, a week, or a month at a time. She’s always like I can’t believe that more than 90% of the people that visit our site and learn that there’s this cookie dough product don’t buy it. It’s one of the great things about her. She’s like it’s just so absurd to me that 90 out of 100 people don’t buy something. She’s like, I would buy it in a heartbeat.

We use AdRoll to go after those people again that do leave, the 90% of people plus that Rana thinks are crazy. We go follow them around the internet and that ROI’s pretty good. They just need to be exposed to our message and our product a couple more times. Then they realize that they made a mistake.

Felix: Right, so when you look at, I think this is an important point because a lot of times, there’s so much conversation, especially when a store or business starting out is how can we just get more people to come to our site. How can we get more people to look at our products? A lot of times, you’re driving traffic that is not going to end up converting. You’re spending a lot of money on people that are not going to buy your product anyway.

I really want to nail down how you can, if someone out there wants to sit down and look at their marketing challenge that you guys are able to do it, how can they do this? If they’re going into Facebook or say Google Analytics, what should they be looking for? How can they set up their analytics in a way that allows them to notice these, not unworthy visitors but visitors that are not going to give you a return?

John: If you have a Facebook page, then you have some demographics about your audiences. If you have a database of emails, use MailChimp or something, you have demographic and geographic information. You can do all kinds of things. You can export your database of email contacts and create look-alike audiences in Facebook, for example. Facebook will say okay, based on those 1,000 or 10,000 or 100,000 email addresses that you uploaded, we can put together a rough demographic of who your target is. There’s all kinds of ways that you can refine that approach.

But you can’t get to the optimal end point right away. You don’t just leapfrog to here’s the four things that work best. You do have to start by making some very calculated guesses in some cases, it’s some sort of data, some sort of gut. You put it out there and then you’re going to be able to refine and tweak. That’s an iterative process, but you do have to just start it.

Take the demographic information that you can glean from who’s most engaged on your posts, who responds on Facebook, on Instagram, all these things. Pull data from your website, from Google Analytics, from your email addresses. You’ll be able to compile, or to Rana’s point, get out and talk to people. You’ll be able to compile a sort of here’s roughly who my demographic is. It’s 18–35 females in major metropolitan cities that also watch The Bachelor or whatever, you know what I mean?

Felix: I think it’s a good point that you can’t expect to get these 3%, 4%, 5% conversion rates right off the bat. These are things that take many years. Like your example, which is you guys have had success and still, like Rana’s saying, these unbelievable conversion rates because it’s an iterative approach. You have to constantly work on improving it. I think if you coming into it expecting to get a crazy conversion rate, you’re definitely setting yourself up for failure and disappointment. You have to spend that money, like you’re saying early on, and guess, educated guess at the demographic you want to target.

Then once you actually start getting customers, once you start getting people interacting with you and interacting with your brand, don’t spend so much time guessing but use the data that you do have. Use the data that you have from the customers, from your database of people that have bought from you in the past, build these look-alike audiences on Facebook, or at least just look into who they are so that you can become even more educated when you decide to run more campaigns.

John: All these tools make it so easy. They really, they’re just getting better and better. You look at the money you spend relative to what it costs to acquire that customer. They should be able to break that out for you by ad or by platform spend. That’s one of the things I consistently look at. I always look at how many people are visiting my site and how much money did I make that day. That’s a good health check for me. Are we making $1 a visitor or making $5 a visitor or making a cent a visitor? To me, that helps me constantly okay, we’re on a good track this week or this month or today, or something crazy happened and some media talked about us and it’s the perfect audience. When The Skim talked about us, I don’t know that we’ve had a more perfect demographic alignment on a media platform talking about us and that just shot through the roof that day.

Felix: Awesome. Other than the tools you already mentioned, like you mentioned AdRoll for retargeting, Google Analytics, what other tools or apps or services do you rely on to run the business?

John: We have a few other things. We’re always testing. We like Shopify for that. There’s just so many different apps and we are constantly evaluating, testing things. We use a loyalty app that rewards people, sort of a rewards app that rewards people for sharing information. If their friends make a purchase, they get a coupon to spend themselves.

Felix: Is this your referral candy that I see on the site?

John: Yeah. We have an exit pop-up app that we use if someone, God forbid, exits their shopping cart, perhaps we’ll offer them up a 10% discount if they give us their email and complete the transaction. There’s different tools that we use to help optimize and learn what’s working. We don’t always keep the apps but we certainly test a big number of them.

Felix: Gotcha. What do you guys want to focus on in this year, in 2017? What do you guys want to focus your attention on for the business?

John: E-commerce is always been the backbone of our company and we’re continuing to super-serve that audience with just an incredible range of flavors and some fun new things that we have launching in 2017. That’ll always be a core focus for us, but we’re also, for those people that have been begging for us to come to stores and they want to run out or have some app go pick us up from their local grocery store right away, we want to make sure that we’re there. We ultimately want to be wherever people want us to be. If that’s a local grocery store near you, that’s where we want to be. We’re definitely focusing on grocery stores. We’ve been doing that here locally in the greater Los Angeles area with a ton of success. We’re looking to expand that success and hopefully be on a grocery aisle near you soon.

Felix: Awesome. Thanks so much for your time. Edoughble.com again is the website, E-D-O-U-G-H-B-L-E.com. Anyone else you recommend our listeners go and check out?

John: No. Everyone loves our Instagram handle, page. That’s just @edoughble. Check us out. We’d love to connect with you on social as well.

Felix: Awesome. Thank you so much again.

John: Thanks Felix.

Felix: Here’s a sneak peek of what’s in store for the next Shopify Masters episode.

Speaker 4: If you’re trying to go deep in your audience, then you don’t want to have too much random stuff on there. You want to just focus on your target market. You think, what’s your ideal target customer and what do they want to see on your website? Put that on there.

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About the Author

Felix Thea is the host of the Shopify Masters podcast, the ecommerce marketing podcast for ambitious entrepreneurs, and founder of TrafficAndSales.com where you can get actionable tips to grow your store’s traffic and sales.